Iran’s public land bank enables low-income housing provision

The World Bank promotes a ‘market-enabling’ approach to housing and urban policy in developing countries. Essentially it recommends governments stop providing housing land directly and instead promote private market activity. However, this advice is widely criticised as inappropriate for some conditions developing countries face.

Such criticisms do not reject the need for better market institutions. Rather, private market provision can be seen as one of a number of policies for tackling the housing crisis. However, the over-emphasis on private market solutions has restricted policy discussion. It has also marginalised alternative policy solutions that may provide a better scope for both addressing social policy objectives and enhancing private sector market capacity. The case of public land management in Iran offers an alternative strategy for developing countries.

A collaborative paper by researchers from Oxford Brookes University, University College London, both in the UK, and Azad University in Iran notes that formal markets do not respond well to rapid urban growth, poverty, lack of resources and chaotic economic conditions. Such conditions, typical in developing countries, can lead to excessive speculative investment and monopoly behaviour.

This limits market activity and drives up land and housing prices without increasing access to mortgage or building finance for low-income households. Ahmadabad, in India, Santiago, in Chile, and Manila, in the Philippines, are dramatic examples of cities where this market-enabling approach has disabled middle- and lower-income groups from accessing housing.

Before the Iranian Revolution of 1979, land prices were extremely high and most land was owned by a small elite. From 1979 to 1992, the government introduced a series of laws to regulate the urban land market. Crucially, urban land was divided into three categories: undeveloped, abandoned and cultivated. The state was then entitled to acquire the undeveloped land for redistribution to the general public, co-operatives and private sector.

Examining the impact of the implementation of the Urban Land Act with redistribution and social equity objectives over a ten year period from 1979 to 1989, the authors find that:

• A total 85,557 hectares of land was acquired by, or transferred to, the then Urban Land Organisation, a public organisation that was set up to acquire and manage excess urban land.
• During the study period, 10,790 hectares of this land was transferred to 422,864 families, through direct allocation, housing co-operative societies and public and private developers.
• This release of land directly to consumers played a market stabilising role.
• It also meant lower land prices and more control for beneficiaries over the type and size of housing units produced.
• In general, the management of this public land bank worked as an effective and sustained alternative to the market and benefited the provision of low income housing.
• The Act provided significant opportunities for expanded private sector low-income housing provision through public-private partnerships, targeting both open market ad cross-subsidised lower income target goups.

While the experience of creating and managing public land banks in many developing countries has been discouraging, this paper argues that the successful case of Iran has been overlooked. The authors conclude with two key recommendations:

• Developing country governments can effectively assemble and distribute public land for housing that benefits a large number of low-income urban-dwellers, as well as enhances private market capacity. Research is needed to further understand the specific factors that made this strategy so effective in Iran.

Source(s):
‘Public Management of Urban Land, Enabling Markets and Low-income Housing Provision: The Overlooked Experience of Iran’, Urban Studies 45 (9), pages 1825 to 1853, by Ramin Keivani, Michael Mattingly and Hamid Majedi, 2008

id21 Research Highlight: 30 April 2009

Further Information:
Ramin Keivani
Department of Real Estate and Construction
Oxford Brookes University
Headington Campus, Gipsy Lane
Oxford, OX3 0BP, UK

Fax: + 44 1865 483927
Contact the contributor: rkeivani@brookes.ac.uk

Oxford Brookes University, UK

Michael Mattingly
Development Planning Unit
University College London
9 Endsleigh Gardens
London, WC1H 0ED, UK

Fax: +44 20 7679 1112
Contact the contributor: m.mattingly@ucl.ac.uk

Development Planning Unit, University College London, UK

Hamid Majedi
Department of Art and Architecture
Azad University
1109 Asman Building, Vanak St, Vanak Square
Tehran, 1991944911, Islamic Republic of Iran

Contact the contributor: majedi_h@yahoo.com

Other related links:
'Who rules Kabul? Why has development aid failed urban recovery?'

'Restoring appropriate sanitation services in Bam'

'Afghanistan’s neglected urban poor households'